By Kevin Buckland

TOKYO (Reuters) - The dollar nursed its wounds on Wednesday following big tumbles against the euro and sterling, hurt by a combination of surprisingly robust European activity data and cooling U.S. business growth.

However the yen remained mired near a 34-year low versus the U.S. currency, even as Japanese officials stepped up intervention warnings.

The dollar index - which measures the currency against six major peers including the euro, sterling and yen - was flat at 105.64 in early Asian trading after slumping 0.4% overnight and touching the lowest level since April 12 at 105.23.

The euro was little changed at $1.069975 following Tuesday's 0.45% rally, after data showed business activity in the euro zone expanded at its fastest pace in nearly a year, primarily due to a recovery in services.

Sterling also benefited from overnight data showing British businesses recorded their fastest growth in activity in nearly a year, while Bank of England Chief Economist Huw Pill said interest rate cuts remained some way off. Sterling was last steady at $1.24485 having jumped 0.79% in the previous session.

By contrast, U.S. business activity cooled in April to a four-month low due to weaker demand, while rates of inflation eased slightly, suggesting some possible relief for the Federal Reserve.

A major test of that will come Friday with the release of the Fed's preferred consumer inflation measure, the PCE deflator. Markets currently price in a 73% chance of a first rate cut by September, according to the CME's FedWatch tool.

Elsewhere, the Australia's dollar hovered at the highest since April 15 at $0.64875 ahead of consumer inflation figures, after rebounding more than 1% over the past two days following its dip to a five-month low on Friday.

The dollar index reached a 5-1/2-month peak at 106.51 last week as persistent inflation forced Fed officials to signal no rush to ease policy.

Despite the dollar's broader struggles on Tuesday, it still inched up enough at one point to mark a fresh 34-year high to the yen at 154.88. This week, the pair has oscillated in an extremely narrow range between that high and a low of 154.50, with traders wary that a push above 155 could raise the risk of dollar-selling intervention by Japanese officials.

Japanese Finance Minister Shunichi Suzuki on Tuesday issued the strongest warning to date on the chance of intervention, saying last week's meeting with U.S. and South Korean counterparts had laid the groundwork for Tokyo to act against excessive yen moves.

The Bank of Japan is widely expected to leave policy settings and bond purchase amounts unchanged at the conclusion of a two-day meeting on Friday, having just raised interest rates for the first time since 2007 just last month.

And while Japan's central bank is likely to signal a readiness to tighten policy again this year, its ultra-cautious, data-dependent approach has limited any strengthening in the yen.

"Aside from the financial cost, there could be a significant impact on the credibility of the Japanese authorities if FX intervention fails," Rabobank strategist Jane Foley wrote in a client note.
 

"Historically, FX intervention is most successful if the fundamentals are coincidentally turning in favour of that currency," she said. "USD/JPY may not turn lower until the summer, and this assumes that the Fed can cut rates in September."

By Chibuike Oguh

(Reuters) -U.S. stocks closed higher on Tuesday following positive earnings from top-tier companies and as investors were focused on quarterly results from Magnificent Seven and other megacap growth stocks.

Tesla (NASDAQ:TSLA) kicked off the earnings cycle for technology heavyweights after markets closed on Tuesday, announcing the launch of new electric vehicle models and quarterly revenue that missed analyst estimates. Its shares jumped 6% in extended hours trading.

That will be followed by results from other tech majors, including Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META), later this week.

Markets were also buoyed by upbeat earnings from companies such as General Motors (NYSE:GM), which closed up 4.4% after the automaker's better-than-expected quarterly results.

Ten out of 11 S&P 500 sectors were advancing led by gains in equities in communication services and technology sectors. The S&P Materials sector ended lower dragged by steelmaker Nucor Corp (NYSE:NUE), which lost ground by 8.9% after a first-quarter earnings miss.

"We're having a continuation of an oversold balance that started yesterday and the catalyst today is that markets are now refocused on earnings reports across a wide array of sectors that were strong," said Keith Lerner, co-chief investment officer at Truist Advisory Services in Atlanta.

The Dow Jones Industrial Average rose 263.71 points, or 0.69%, to 38,503.69, the S&P 500 gained 59.95 points, or 1.20%, to 5,070.55 and the Nasdaq Composite gained 245.34 points, or 1.59%, to 15,696.64.

Data on Tuesday showed that U.S. business activity cooled in April to a four-month low due to weaker demand, while rates of inflation eased slightly even as input prices rose sharply, suggesting possible relief ahead for rising consumer prices.

Investors will be eyeing the release of the March Personal Consumption Expenditures (PCE) index - the Federal Reserve's preferred inflation gauge - which is due on Friday.

Money markets are now pricing in just about 43 basis points of interest-rate cuts, down from about 150 bps seen at the start of the year, according to LSEG data.

"The PMI report was a little bit weaker and the employment was a little bit weaker and the market at this point is taking that is a bad-news-there-is-good-news, meaning the people are becoming too hawkish on Fed expectations," Lerner added.

Spotify (NYSE:SPOT) rose 11.4% after the Swedish music streaming giant posted gross profit that topped 1 billion euros ($1.1 billion) for the first time.

Bullish full-year profit forecast helped to lift GE Aerospace shares by 8.3%. Danaher (NYSE:DHR) gained 7.2% after the life sciences firm beat quarterly profit and sales expectations.

Shares of JetBlue plunged nearly 19% as the low-cost carrier trimmed its annual revenue forecast following lukewarm first-quarter revenue.

Advancing issues outnumbered decliners by a 4.89-to-1 ratio on the NYSE. There were 86 new highs and 30 new lows on the NYSE. On the Nasdaq, 3,051 stocks rose and 1,135 fell as advancing issues outnumbered decliners by a 2.69-to-1 ratio.

The S&P 500 posted 12 new 52-week highs and 2 new lows while the Nasdaq recorded 57 new highs and 85 new lows.

Volume on U.S. exchanges was 10.57 billion shares, compared with the 11.07 billion average for the last 20 days.

By Leika Kihara and Makiko Yamazaki

TOKYO (Reuters) -Japanese Finance Minister Shunichi Suzuki said last week's meeting with his U.S. and South Korean counterparts has laid the groundwork for Tokyo to act against excessive yen moves, issuing the strongest warning to date on the chance of intervention.

"I voiced strong concern on how a weak yen pushes up import costs. Our view was shared not just in a meeting with my South Korean counterpart, but at the trilateral meeting that included the United States," Suzuki told parliament on Tuesday.

"I won't deny that these developments have laid the groundwork for Japan to take appropriate action (in the currency market), though I won't say what that action could be," he said.

The fresh warnings came after the dollar rose to 154.85 yen, its strongest levels against the Japanese currency since 1990, keeping markets on heightened alert for any signs of intervention from Tokyo to prop up the yen.

The United States, Japan and South Korea agreed to "consult closely" on foreign exchange markets in their first trilateral finance dialogue last week, acknowledging concerns from Tokyo and Seoul over their currencies' recent sharp declines.

The rare warning from the three countries' finance chiefs, which was inserted in a joint statement after their meeting, was seen by some analysts as Washington's informal consent for Tokyo and Seoul to intervene in the market when necessary.

Japan could intervene in the currency market at any time as recent yen falls are excessive and out of line with fundamentals, ruling party executive Satsuki Katayama said.

"I don't think Japan will face any criticism if it were to act now," Katayama told Reuters in an interview on Monday, when asked about the timing of a possible currency intervention.

BOJ MEETING IN FOCUS

While a weak yen boosts exports, it has become a headache for Japanese policymakers as it inflates the cost of living for households by pushing up import prices.

At a regular news conference earlier on Tuesday, Suzuki stressed that Japanese authorities will work closely with overseas counterparts to deal with excessive volatility in the foreign exchange market.

"We are watching market moves with a high sense of urgency," Suzuki told reporters, adding that Tokyo authorities were ready to take action "without ruling out any options" against excessive currency moves.

Japanese policymakers may be escalating verbal warnings ahead of Japan's Golden Week holidays next week to keep traders on guard over the chance of intervention, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"Regardless of whether there will be one, markets are certainly more alert on the chance of intervention, he said.

The latest decline in the yen comes after a string of strong U.S. economic data, particularly on inflation, which pushed the dollar to five-month highs and reinforced expectations that the Federal Reserve is unlikely to be in a rush to cut interest rates this year.

That dynamic has focused market attention on how the yen's weakness would affect the timing of the next rate hike by the Bank of Japan, after BOJ Governor Kazuo Ueda last week signalled the central bank's readiness to tighten policy if the weak yen's boost to inflation becomes hard to ignore.

Speaking at a parliament session on Tuesday, Ueda said the BOJ will raise interest rates if trend inflation accelerates towards its 2% target as it expects.

The BOJ will conclude a two-day policy meeting on Friday. While markets are betting it would keep short-term rates unchanged, the central bank is expected to project inflation will stay around its 2% target for the next three years, sources have told Reuters.

Japan last intervened in the currency market in 2022, first in September and again in October, to prop up the yen.

By Anant Chandak

BENGALURU (Reuters) - India's business activity expanded at its fastest pace in nearly 14 years this month thanks to robust demand, according to a survey released on Tuesday that also showed easing input inflation and positive jobs growth.

That suggests India is well placed to remain the fastest growing major economy this year after posting strong expansion over the past few quarters.

HSBC's flash India Composite purchasing managers' Index, compiled by S&P Global, rose to 62.2 this month from March's final reading of 61.8.

The reading has been consistently above the 50-mark separating expansion from contraction since August 2021.

"Strong performance in both the manufacturing and service sectors, led by increased new orders, resulted in the highest composite output index since June 2010," noted Pranjul Bhandari, chief India economist at HSBC.

The strong expansion was led by services activity, with the index rising to a three-month high at 61.7 from March's 61.2, thanks to new business - a key gauge for demand - accelerating.

A manufacturing PMI held strong at March's 59.1 this month. Both output and new orders for goods continued to grow at a robust pace, albeit slightly slower than last month.

Overall international demand was solid and the composite sub-index rose to the highest since it was added to the survey in September 2014.

Strong sales improved the business outlook for the coming 12 months from a four-month low in March.

Efforts to meet rising demand supported jobs growth, which was the most pronounced in manufacturing where it increased at the fastest pace in one-and-a-half years.

However, employment generation among services firms was slower than in March.

Meanwhile, input costs cooled for both goods producers and their services counterparts but demand strength enabled passing on expenses to customers.

A stronger increase in output costs among manufacturing firms contrasted with a slower rise in the services industry.

"Manufacturing margins improved in April as firms were able to pass on higher prices to customers due to strong demand conditions," added Bhandari.

That means inflation may not fall fast enough for the Reserve Bank of India to start considering rate cuts any time soon as price rises were likely to stay above the central bank's 4% medium term target for longer.

BANGKOK (Reuters) - Thailand's Prime Minister Srettha Thavisin on Tuesday said he had asked the country's four largest lenders to lower interest rates to help small businesses and the economy. 

"Vulnerable groups like SMEs have a problem with a high interest rates ... I asked the four to consider interest rates," Sretta told reporters, adding Thai financial institutions were strong.

Thailand's four largest lenders are Bangkok Bank, Kasikornbank, Krungthaibank and SCBX.

LONDON (Reuters) - British Prime Minister Rishi Sunak will announce a 500 million pound ($617 million) uplift in military support for Ukraine on a visit to Poland on Tuesday, warning that Russia must be defeated to prevent its troops from pressing further into Europe.

Sunak's visit to Poland to meet Prime Minister Donald Tusk is his first international trip for months and is aimed at showing his restive party he is still in command before an election later this year he is widely expected to lose.

Britain has long been a vocal supporter of Ukraine, and the additional funding will take London's total military aid for this financial year to 3 billion pounds, just days after the U.S. House of Representatives approved a $60 billion package.

"Defending Ukraine against Russia's brutal ambitions is vital for our security and for all of Europe. If Putin is allowed to succeed in this war of aggression, he will not stop at the Polish border," Sunak said in a statement.

"Ukraine's armed forces continue to fight bravely, but they need our support - and they need it now. Today's package will help ensure Ukraine has what they need to take the fight to Russia," he said before the visit.

Britain will also send what it described as its largest-ever single package of equipment, including 60 boats, more than 1,600 strike and air defence missiles and nearly 4 million rounds of small arms ammunition.

With Russia making some gains, Ukrainian President Volodymyr Zelenskiy has urged countries to help Kyiv get the long-range arms and air defence systems he says are needed to turn the tide.

In Poland, Sunak will meet Tusk, who as European Council president was outspoken over Britain's decision to leave the European Union, for the first time in person to discuss not only security but also deepening trade ties. ($1 = 0.8102 pounds)

By Chibuike Oguh

NEW YORK (Reuters) -Wall Street stocks ended higher on Monday following a market sell-off in previous sessions as investors eyed a busy week for quarterly results from key companies that would provide a glimpse of the U.S. economy's health. The benchmark S&P 500 and the Nasdaq rebounded from a decline over the past six sessions which had been caused by investors re-evaluating their expectations on interest rate cuts in the wake of strong economic data, geopolitical tensions, persistent inflation and commentary from Federal Reserve officials.

All 11 S&P 500 sectors closed higher, with technology and financial stocks leading gains. Markets were gearing up for quarterly results from megacap companies this week, including some of the so-called Magnificent Seven stocks such as Tesla (NASDAQ:TSLA), Meta Platforms (NASDAQ:META), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT). "I think it's just standard buy-on-the-dip after a 5% pullback that kind of wakes people up to put money to work," said Lamar Villere, portfolio manager at Villere & Co in New Orleans. "Investors are looking ahead to this week with hugely significant earnings coming out and with concerns about what the Fed is doing with pushing back any rate cuts," Villere added. Money markets are pricing in only about 41 basis points (bps) of rate cuts this year, down from about 150 bps seen at the beginning of the year, according to LSEG data. In addition to top corporate earnings, markets are also awaiting the release later this week of the March personal consumption expenditure (PCE) data - the Fed's preferred inflation gauge - to further ascertain the trajectory of monetary policy.

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Fed policymakers are in a media blackout period ahead of their policy meeting on May 1.

The S&P 500 gained 43.37 points, or 0.87%, to 5,010.60 and the Nasdaq Composite gained 169.30 points, or 1.11%, to 15,451.31. The Dow Jones Industrial Average rose 253.58 points, or 0.67%, to 38,239.98.

Megacap growth stocks ended higher, with gains in Alphabet, Amazon.com (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) between 0.5% and 1.5%. Nvidia (NASDAQ:NVDA) gained 4.4% to rebound from a 10% drop in the previous session.

"This is predicated on positive technical expectations on tech earnings and traders not wanting to be short in front of it, and the PCE numbers later this week that people are somewhat sanguine about as well," said Thomas Hayes, chairman of hedge fund Great Hill Capital in New York.

Tesla shares dropped 3.4% as the electric vehicle maker cut prices in a number of its major markets, including China and Germany, following price reductions in the United States.

Cardinal Health (NYSE:CAH) fell 5% after the drug distributor said its contracts with UnitedHealth Group (NYSE:UNH)'s OptumRx, one of its largest customers, will not be renewed when they expire at the end of June.

Advancing issues outnumbered decliners by a 2.87-to-1 ratio on the NYSE. There were 49 new highs and 76 new lows on the NYSE. On the Nasdaq, 2,682 stocks rose and 1,499 fell as advancing issues outnumbered decliners by a 1.79-to-1 ratio.

The S&P 500 posted 9 new 52-week highs and 4 new lows while the Nasdaq recorded 40 new highs and 184 new lows.

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Volume on U.S. exchanges was 10.33 billion shares, compared with the 11.03 billion average for the last 20 days.

MOSCOW (Reuters) - Russia now has grounds to confiscate Western assets after the U.S. House of Representatives passed legislation that would allow the potential transfer of seized Russian assets to Ukraine, a top Russian lawmaker said on Monday.

"Washington has passed a law on the confiscation of Russian assets in order to provoke the EU to take the same step, which will be devastating for the European economy," Vyacheslav Volodin, the Duma speaker and close ally of President Vladimir Putin, said.

"Our country now has every reason to make symmetrical decisions in relation to foreign assets," said Volodin.

Volodin said that of the $280 billion of Russian assets frozen abroad, only $5 to $6 billion was in the United States while about 210 billion euros ($224 billion) was in the European Union.

NBC said the House passed the "REPO Act" which would allow the administration of U.S. President Joe Biden to confiscate billions of dollars’ worth of Russian assets sitting in U.S. banks and transfer them to Ukraine for reconstruction.

($1 = 0.9377 euros)

By Dharamraj Dhutia and Nimesh Vora

MUMBAI (Reuters) - India's rupee and government bonds will move this week based on developments in the Middle East crisis as well as a key U.S. inflation gauge that will impact the interest rate outlook.

The rupee dropped to a record low of 83.5750 to the U.S. dollar on Friday amid worries over a wider conflict in the Middle East and expectations that U.S. interest rates are likely to remain higher for longer.

The currency fell 0.1% in the week to end at 83.47, and the losses would have been larger had it not been for the Reserve Bank of India's (RBI) intervention.

The rupee should trade in a 83.25 to 83.75 range this week, traders said.

Emerging market currencies have come under pressure on concerns of a wider fallout of the Israel-Iran skirmishes.

"I would think that if there is more negative news on Middle East, RBI would be intervene heavily again based on how it has been in recent days," Kunal Kurani, associate vice president at Mecklai Financial, said.

The hawkish tone of Federal Reserve policymakers has prompted investors to dial back interest rate cut expectations.

U.S. core personal consumption expenditures price index, the Fed's preferred inflation measure, is due on Friday and will be watched for cues on the rates path ahead of a policy decision next week.

Meanwhile, the 10-year Indian government bond yield ended at 7.2278% on Friday, gaining 5 basis points in the week, after rising 11 bps in two previous weeks.

Traders expect the benchmark bond yield to move in a 7.16%-7.27% range this week.

Bond yields have been on an uptrend, tracking upward trajectory in U.S. yields as well as oil prices.

Treasury yields have risen as markets are now expecting fewer than 50 basis points of rate cuts in 2024.

Still, the recent rise in Indian bond yields has investors scouting for value as yields are seen easing later this year despite the local central bank holding rates, treasury officials have said.

"The benchmark bond yield may not rise much above 7.23%-7.25% levels," VRC Reddy, treasury head at Karur Vysya Bank said.

DBS Bank expects the benchmark yield to slip below 7% in July-December. As Indian government bonds have "low beta" to global bond movements, it is a good diversification trade for international debt market investors, the bank said.

KEY EVENTS: ** U.S. April S&P Global manufacturing, services and composite PMI - April 23, Tuesday (7:15 p.m. IST)

** U.S. March new home sales - April 23, Tuesday (7:30 p.m. IST) ** U.S. March durable goods - April 24, Wednesday (6:00 p.m. IST)

** U.S. initial weekly jobless claims week to April 15 - April 25, Thursday (6:00 p.m. IST)

** U.S. January-March advance GDP - April 25, Thursday (6:00 p.m. IST) (Reuters poll 2.1%) ** U.S. March personal consumption expenditure, core PCE index - April 26, Friday (6:00 p.m. IST)

** U.S. April U Mich sentiment - April 26, Friday (7:30 p.m. IST)

LONDON(Reuters) - Prices of homes being sold in Britain are close to their record highs after the biggest annual increase in a year, according to an industry survey that suggested the momentum in the housing market of early 2024 extended into April.

Property website Rightmove (OTC:RTMVY) said on Monday its asking prices for residential properties rose by 1.7% in the four weeks to April 13 when compared with the same period last year.

Prices sought by sellers rose by 1.1% in month-on-month terms, slowing from a 1.5% increase in the previous four weeks.

The average new seller asking prices of 372,324 pounds ($463,320) was only 570 pounds of a record hit in May 2023, Rightmove said.

Other measures of Britain's housing market have also shown a recovery in demand and prices, helped by a fall in borrowing costs which surged in 2022 when former Prime Minister Liz Truss's plans for sweeping tax cuts upset financial markets.

Rightmove said the number of new sellers was 12% higher than a year earlier and the number of sales was up by 13%. Demand was strongest in the high-end segment where asking prices in 2024 so far are up by the most since 2014.

Demand for properties typically sought by first- and second-time buyers - who are typically more mortgage-dependent rose by less, the survey showed.

"Despite the current optimism, these are not the conditions to support substantial price growth," Tim Bannister, Rightmove's director of property science, said.

"Sellers who are keen to secure their sale will still need to price realistically for their local market and avoid being over-ambitious."

($1 = 0.8036 pounds)